Frequently
Asked Questions
What is a Reverse Mortgage?
A Home Equity Conversion Mortgage (HECM) Reverse Mortgage is a government insured home loan that allows seniors 62 and older to withdraw equity from their home without having to make principal
and interest payments so long as they occupy the home as their primary residence.
Who Qualifies for a Reverse Mortgage?
Persons 62 and older who have sufficient equity in their primary residence.
When is the Loan Repaid?
A Reverse Mortgage becomes due and payable when the borrower(s) sell the home or fail to comply with the terms of the loan
(i.e. no longer occupy the home as their primary residence, etc.).
Can I Apply for a Reverse Mortgage if I Currently Have a Mortgage?
Absolutely. Similar to traditional refinancing, all existing liens, loans, encumbrances will be paid off by the new Reverse Mortgage.
If I Get a Reverse Mortgage, Who Owns My House?
YOU are always in ownership of your home.
Are There Limits on How I Use the Money?
No, it is your money to use how you wish.
How Much Does A Reverse Mortgage Cost?
Every transaction is different, and most loan costs do not need to come out of pocket (they can be included with the loan).
Typical costs include counseling, appraisal, loan costs, transactional expenses (escrow, title insurance).
What Is the Counseling?
To protect seniors, the FHA requires all borrowers attend a counseling session to confirm you understand the transaction, are aware of other options, etc. The counseling completion certificate will need to be given to your loan agent prior to the application.
What Properties Qualify for a Reverse Mortgage?
It must be your primary residence and follow FHA Guidelines of being a l -to-4-unit property. Condos must be in an FHA approved complex.
What Properties Do Not Qualify?
Secondary residences, vacation homes, commercial properties, and rental properties of more than four units do not qualify.
What Are the Options for Me to Receive the Proceeds?
- Lump Sum – while we call it lump sum, it is actually Lump Sums, as there are federal limitations that often prevent the entire proceeds from being distributed at the close of the loan. In such cases, the remainder are available about one year later.
- Line of Credit – which you can use any time and that grows over time.
- Fixed Monthly Instalments – a set amount deposited to your account every month.
- Combination – monthly payments and line of credit.
How Much Money Can I Get?
This depends on a number of factors including the age of the youngest borrower, the value of the property, the interest rate, and the existing liens on the property.
Our licensed specialists will work with you to create a complimentary written proposal showing the proceeds and the options available to you.
Am I Taxed on the Money I Get?
The funds from a Reverse Mortgage are tax free; It is your money, not additional income.
Will It Affect Social Security or Other Benefits?
Generally, a Reverse Mortgage does not affect Social Security or Medicare benefits. To be sure, check with your local office.
When I pass away doesn't the bank own the home?
No. The loan against the house will need to be paid, but the house is treated as part of the estate (the same as any standard mortgage).
What Happens When the Property Passes to My Heirs?
The heirs can pay off the loan and keep the property or sell the property and receive the proceeds.